Brent steadies under $108; U.S. vote, Greece in focus

SINGAPORE Wed Nov 7, 2012 12:06am IST

Workers stand to wait for customers at a gas station in Tokyo March 15, 2012 REUTERS/Toru Hanai

Workers stand to wait for customers at a gas station in Tokyo March 15, 2012

Credit: Reuters/Toru Hanai

SINGAPORE (Reuters) - Brent oil traded in a tight range below $108 per barrel on Tuesday, hurt by uncertainty ahead of the U.S. elections and renewed worries about Greece and the euro zone crisis, which could delay a global economic recovery and dampen oil demand.

President Barack Obama and Republican challenger Mitt Romney were essentially deadlocked on the election eve, polls showed, raising concerns of a cliffhanger delaying the outcome and roiling markets, as it did during the extended presidential battle in 2000.

Adding to the worries was news that a deal to keep near-bankrupt Greece afloat may not be reached at a euro zone finance ministers' meeting next week.

Front month Brent futures were trading 5 cents higher at $107.78 per barrel by 0722 GMT, trading in a tight 44-cent range so far in the session. Brent rallied nearly 2 percent on Monday, driven higher by rising tensions in the Middle East.

U.S. crude slipped 1 cents to $85.55 per barrel.

"Trading volumes have been thin as the focus is on the U.S. elections at the moment," said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore.

The absence of a decisive win and a clear Congress majority raises the chances of messy negotiations over the "fiscal cliff", nearly $600 billion worth of spending cuts and tax increases that risk pushing the U.S. economy into deep recession, analysts say.

DASHED HOPES

Investors are also monitoring the aftermath of superstorm Sandy on the U.S. East Coast and the Greek situation, Ker said.

"In Europe, there are concerns Greece may not get the funding and the argument that Greece could quit the euro may come back to haunt the risk sentiment of investors," he said.

Euro zone debt concerns resurfaced once more as hopes of a fresh funding deal for Greece at a November 12 meeting of ministers were dashed.

Lawmakers have yet to find a formula to make Greek debt sustainable, a European Union source said.

Athens also needs to push through spending cuts and tax measures worth $17.5 billion, along with a raft of economic reforms that will satisfy EU and IMF lenders.

A 48-hour strike against the planned measures begins on Tuesday, a day ahead of a key parliamentary vote on labor reforms.

"Since Greece cannot receive the next tranche from the Troika if the (reform) package is not endorsed, markets could begin to price in renewed political instability and a higher probability of a Greek exit," Bank of America Merrill Lynch analysts said in a report.

Markets are also eyeing data from the American Petroleum Institute on Tuesday for clues to the impact of superstorm Sandy on oil inventory in the world's top consumer.

U.S. crude inventories are forecast to have risen by 0.9 million barrels in the week to November 2, while product stocks fell after disruptions to pipelines, imports and refineries, a preliminary Reuters poll of analysts showed on Monday.

Oil prices may get some support as worries about unrest in the Middle East, the key supplier of the world's crude, were revived by a suicide bomb attack in Syria.

In addition, Al Qaeda-associated militants released from Saudi prisons killed two Saudi border guards while trying to cross into Yemen before being captured, the kingdom's interior ministry said.

(Editing by Clarence Fernandez and Joseph Radford)

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